Ah, millennials. When they’re not squandering their income on avocados they’re complaining about being unable to afford to buy their first home.
This week a new report is likely to be latched onto by all those who believe the younger generation are just avocado-buying whingers. Research carried out by Direct Line claims that millions of young British people want to have expensive purchases so they can flaunt them in front of their friends and family.
Almost a quarter of respondents aged between 18 and 34 told the insurer that TV shows like TOWIE and Real Housewives focus on flaunting wealth and so they want to do so too. More than a third said they bragged about their expensive branded goods on social media and one in five said there is no point owning nice things if other people don’t know about it. Older generations felt very differently and were far less likely to boast about the cost of what they bought.
It paints an unattractive picture and will fuel the notion that the millennial generation is fixated on material things and immediate rewards. Older homeowners with comfortable pensions might feel scant sympathy for the next generation’s financial struggles if they think they are spending thousands of pounds on handbags and watches.
Research carried out for the Independent by digital insights agency Toluna surveyed over 1,000 people and found that 70 per cent felt millennials waste more money on expensive purchases than older generations did.
Yet there could be another reason that the millennial generation is quicker to flaunt such luxuries. Unlike previous post-war generations, they are less likely to own their own home, less likely to save an adequate pension and less likely to actually leave their parents’ homes.
It’s not too surprising that younger buyers are feeling priced out of home ownership; the latest figures show they need a deposit of more than £32,000 on average or £100,000 in London.
Four out of 10 millennials have no pension savings at all and the International Monetary Fund has warned that traditional state pensions are unlikely to exist in their current form within a few decades.
And last year official figures showed that there were more than 2.8 million adults aged between 21 and 34 still living with their parents, a jump from 2.1 million in 2005.
It’s easy to argue that these are all the more reason why young people should spend less and save more. However, if buying a house and gaining real financial security seems almost completely out of reach then it is understandable that young people might instead boost their self-esteem with expensive luxuries. However expensive that handbag, it won’t cost more than a house.
Liz Emerson, the co-founder of the Intergenerational Foundation, says it is understandable that younger people occasionally splash out.
She says: “Today’s young professionals already face a marginal tax rate of 41 per cent after student loan repayments, national insurance, and income tax. That is before the depressing reality that younger workers are unlikely to ever own a home of their own, or have adequate pensions, unlike their parent’s generation.
“Even moving out to rent has become increasingly unaffordable due to declining wages and the high cost of housing. With a third of graduates now in non-graduate jobs there may be little to look forward to in the future beyond a luxury purchase now and again.”
However, she also raises an eyebrow at the notion that millennials have spare income when the foundation’s own research suggests that the younger generations are eating out less, spending less at the supermarkets and visiting the cinema and theatre less than older Brits.
But the research is easily believable for Antonia Timpany, owner of luxury designer resale and sourcing specialist Timpanys. She recently sold a £12,000 Birkin bag to a girl for her 21st birthday and says: “Millennials have been so bombarded by status symbols such as handbags and jewellery due to bloggers, vloggers, instagrammers and reality TV influencers that it has led to an increased awareness of branded goods and an aspiration to purchase them.
“The irony is that many of these influencers haven’t even paid for the pieces they are promoting but are simply given them. A flashy purchase such as a handbag is far more obtainable than a property but still substantial enough to signal to your peers that you are successful as they all immediately know what the current retail price is of the piece of bling on your arm.”
Karl Elliott, customer strategy director at the mutual OneFamily, says such bling can cause tensions between different generations of the same family: “With increasing financial pressure on the majority of young adults, it’s not surprising that they are keen to show off luxury purchases to friends and family, rather than focusing on long-term assets that seem out of reach.
“This creates an interesting dynamic with the older generation who are often providing them with financial support, which sometimes runs into thousands, for items like new cars or holidays.”
Need for prestige
According to Abraham Maslow, humans need to feel some prestige, status and respect from others; it’s level four of his Hierarchy of Needs. That could certainly be a reason that young people who can’t buy homes or achieve job security may instead spend money on expensive luxuries they can boast about on social media.
That would not make them more spendthrift than previous generations, just less able to feed their sense of selves through more traditional measures of status and prestige.
Unfortunately, there’s evidence that eventually they will be left feeling rather let down. Research from the Yorkshire Building Society shows that 69 per cent of British people aged between 18 and 40 say that owning their own home will be essential to feeling they have succeeded in life.
In the long term, expensive watches and gadgets and handbags may not measure up, no matter how many likes.
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